Something I have written about in the past: the household balance sheet. We know that Equity = Assets - Liabilities.
Household equity - derived from the household balance sheet
I look at equity as a measure of expectations - the implied income less debt. The adage of buying a house for investment means you must sell your house. If you happen to live in the house it means you must seek another domicile. I'm sometimes not sure if that makes any investment sense, though I could see the case that a house may be a store of value.
I focus on households because we all belong to a household - whether that means you have a warm, loving family at home or you are a single, poor and miserable individual living on the street. Not everyone belongs to a business - some of us are retired, unemployed or in some way or another not part of a business. Of course, we all live within a nation, governed on our behalf by non-elected or elected rulers, but we are not the government.
Household equity divided by disposable personal income (blue); household equity divided by gross domestic product (red).